Go to the Globe and Mail homepage

Jump to main navigationJump to main content

(Ryan Szulc)
(Ryan Szulc)

ROB Magazine

The mystery woman behind the blockbuster MLSE deal Add to ...

Sources suggest that the road to the deal was smoothed by a move that Rowe made early on—she let it be known that she wasn’t certain Tanenbaum and the chairmanship of MLSE were such a great fit. After all, when Teachers’ looked around its portfolio, most of the companies in which it had stakes were run by industry experts, not wealthy scions. (Tanenbaum, whose family wealth comes from the construction business, is the chairman of a private equity fund in which he’s a major investor, Kilmer Capital Partners Ltd.)

No outright threat was ever made to Tanenbaum, and a source close to him is adamant that the MLSE chairman was not aware that his position would be on the line should Teachers’ decide to carry on as an owner of the company.

Rowe is not about to resolve this question. “We’re not going to talk about that,” she says. “Because, you know what, it’s moot. The reality is Rogers and Bell and Kilmer got together after we made our announcement of taking the asset off the table, and they put forth a compelling bid.”



**************************************************



With that deal a wrap, the hunt for value resumes. Teachers’, after all, has a projected long-term shortfall. “You need to find lots of great high-quality investments that are going to create excellent returns over time,” Rowe says. Indeed, the very day of the MLSE announcement, Teachers’ made another deal, one that attracted much less notice: It teamed up with an American private equity firm to take Blue Coat Systems Inc. private.

Blue Coat, a specialist in Internet security, has lately been accused of abetting the al-Assad regime’s bloody clampdown on dissent in Syria. This may not sit well with Teachers’ membership, which was vocally opposed to their plan’s investment in teacher-bashing Toronto Sun Publishing Corp.

If Teachers’ was going to be guided by sentiment, however, it wouldn’t have sold MLSE. And there are few companies out there without ethical liabilities. Finding future paydays that come without too much political grief will be just one more challenge for Sarah Jane Rowe of Carbonear.

**************************************************



LIVE LONG AND PROSPER (AND INCREASE YOUR CONTRIBUTIONS, OK?) Ontario schoolteachers’ longevity puts their plan in bind

Jane Rowe’s problem at Ontario Teachers’ Pension Plan is that schoolteachers live too long. Actuarially speaking, that is.

All pension plans are squeezed between increasing life expectancy rates and the lousy returns commonly experienced in an era of low interest rates and unpredictable stock markets. But compared to her counterparts at other plans such as the Canada Pension Plan Investment Board, Rowe faces more pressure to find stellar investments that generate big returns in the next decade or two. For this, she can blame schoolteachers for being a healthier lot—fewer smokers, more of an “apple a day” mentality—than many other professions. They are also more likely to be female. Those two factors help explain why schoolteachers live longer than the average population, and why Teachers’ is forecasting shortfalls between the assets in hand and the payouts due over the next 70 years.

Thus, teachers will likely have to pay higher contributions (indeed, those rates have already increased) and/or accept reduced benefits. Strong investment returns can obviously help to close the gap. But the flip side is that the plan can’t afford to have major investments crater.

And hiking contribution rates can only do so much of the job. In 1970, there were 10 working members of the plan for every pensioner. Today there are fewer than two working teachers for each pensioner. And a teacher who retires today is expected to collect a pension for about 30 years—four years longer than the average number of years they worked. Pensioners don’t share the cost of resolving funding shortfalls; that’s up to their younger colleagues and the plan.

In comparison, the situation at CPPIB looks downright rosy. It is not expected to have to increase contributions from the employed for the next 70 years. The fund won’t have to start tapping its investment income until 2021. “They’re at a different spot in the pension plan life cycle,” Rowe explains. “They’re what we call an ‘immature’ plan—they’re still collecting a lot more than they have to pay out. We’re the mature pension plan at this point, so we actually pay out more than what we’re receiving in contributions.”

**************************************************

SPORTING VALUES In worth, MLSE teams well back in global pack

Manchester United The world’s most valuable team is estimated to be worth $1.86 billion

Dallas Cowboys Are a close second at $1.81 billion

New York Yankees $1.7 billion

Washington Redskins $1.55 billion

Pittsburgh Steelers $996 million

Los Angeles Lakers $643 million

Toronto Maple Leafs $521 million (the highest value for an NHL team)

Toronto Raptors $399 million

SOURCE: FORBES

Single page

Follow on Twitter: @taraperkins

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories